Man pleads guilty to laundering money through phoney company

July 13, 1994|By Marcia Myers | Marcia Myers,Sun Staff Writer

An Annapolis man pleaded guilty in Baltimore yesterday to laundering drug money through a phoney company and defrauding the Department of Veterans Affairs by using false identities to obtain VA-backed home mortgage loans.

In all, prosecutors say, Steven Emory Jones' nine-year scheme defrauded numerous creditors and government agencies of more than $800,000, and included attempted transactions involving an additional $700,000.

Senior U.S. District Judge Herbert F. Murray did not immediately accept the plea of the 39-year-old defendant, saying he wanted to review the case first. Prosecutors are recommending a four-year sentence.

In response to a 15-count indictment returned by a grand jury last spring, Jones entered an agreement with prosecutors, pleading guilty to six counts: conspiracy to engage in money laundering; wire, mail, bank and bankruptcy fraud; and making false statements to a government agency.

He was arrested in February after an investigation that had determined that Jones' activities began in 1985, when he started advising a marijuana dealer on how to conceal the source of his income.

"The investigating agents did a brilliant job in tracing Mr. Jones through the thicket of false names and fake addresses he had erected to hide his true identity," said Assistant U.S. Attorney Jefferson M. Gray. "Thanks to them, a remarkable white collar criminal career has been brought to an end."

The case was handled by agents Jim Johnson of the FBI, Warren Lee of the Inspector General's Office of Veterans Affairs, and Paul Kolb of the Internal Revenue Service.

According to papers filed in U.S. District Court in Baltimore:

Jones in 1985 became involved with marijuana dealer Daniel Edward Birch, who pleaded guilty to federal charges this year and is to be sentenced later this month. After learning that Birch was earning substantial sums of money from narcotics trafficking, Jones recommended that he file tax returns so it would appear that he had a legitimate source of income.

Jones opened a bank account under the name "Home Menders," a fictitious company. Mr. Birch then directed drug proceeds to Jones, who deposited the money and returned it to Mr. Birch in the form of a fake payroll check. He also prepared phoney W-2 forms for Birch.

The next year, Jones proposed that they hide some of the money by investing it in real estate. Over the next two years, he purchased 10 properties in Maryland and Texas. Jones also filed phoney tax returns from 1986 to 1988, claiming to work in home improvement and real estate businesses.

In 1991 and 1992, he used false identities to obtain VA-back home mortgage loans for three properties in Frederick.

Later, he filed phoney documents that appeared to give him clear ownership of the properties, and he pocketed the proceeds after selling them.

The Veterans Administration and a Silver Spring lending institution lost more than $289,000 as a result, according to court documents. HUD cited losses of nearly $17,000, and other creditors lost approximately $490,000.

Birch, who prosecutors said had sold several hundred kilos of marijuana over the years, could face about five years in prison, Mr. Gray said. He has pleaded guilty to one count of conspiracy to traffic in narcotics and one count of conspiracy to engage in money laundering.

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